Companies today amass more data than ever before, and a digital transformation tends to increase the amount of data collected. Due in part to the volume of data that most companies have accumulated, marketers are urged to be more data-driven if they want to achieve the best results for their efforts. However, many businesses do not realize that it is no longer enough to be data-driven. Databases are not adequate substitutes for truly knowing your customers.
Data can provide you with statistics, but there is no context. From your data, you can gather specific facts. You can learn names, addresses and perhaps gender or age. Until you can use your data to provide useful information, however, your databases are doing little more than taking up space.
Once you start organizing your data, you begin to translate facts into information that you can use. Your data begins to make more sense as you start to link the facts and add context. You can now see that a particular customer is a female in a certain city who made a purchase on a given date. Unfortunately, for many businesses, the process stops at this point. They use the information they have compiled to plan marketing and engagement strategies without realizing that they need to go an additional step. They need to progress to knowledge management.
Basics of Knowledge Management
Data is not information, and information is not knowledge. To illustrate the differences, assume that you have data fields consisting of the following in your customer database.
• John Doe
• San Francisco
In your database of transactions, you have the following fields.
• John Doe
• Mystery novels
• John Doe
• Mystery novels
You now have certain facts, but until you connect your customer database with your transactions, you do not have information. By linking and organizing your data, you can now determine that John Doe is a 40-year-old male who lives in San Francisco and who purchases mystery novels. You may think that you have sufficient information to offer him a personalized experience. However, you do not yet know enough about him to ensure that your offerings will be relevant.
You need to turn your information into knowledge. Did Doe make his purchases with a mobile device, or did he visit a physical store? At what time were his purchases made? Did he have his purchases gift-wrapped? How did he pay for his purchases? How many purchases has he made? What is his average time between purchases? Has he ever contacted your customer service department or corresponded with your company? Has he mentioned your company or product in any online forums or on his social page? Which pages of your website has he visited? Finding the answers to these questions can help you develop a 360-degree view of your customer.
Once you have leveraged technology to turn your information into knowledge, you can apply what you know to your marketing efforts. Some of your knowledge will be explicit; for example, if John Doe always has his purchases wrapped, you can safely assume that the novels were gifts. Other knowledge may be based on deductions; if Doe makes similar purchases around the same dates every year, you might assume that the gifts are for a family member or a friend or colleague with whom he has a close relationship. Therefore, you could deduce that if you offered him promotions on mystery novels shortly before his normal purchase dates, he would respond favorably. Instead of being data-driven, you can now be knowledge-driven, increasing your chances of a positive result.
The example given is a simplified illustration of how you can go from a reliance on data to a reliance on knowledge. You will need to leverage technology to help you achieve your goals. For example, you cannot achieve true knowledge with data silos that cannot be accessed. You will also need an analytics program to help you turn your data into knowledge that you can use effectively. However, knowledge can give you power over your competition, allow you to react quickly to changing market conditions and increase your company's profitability.